New landlord- Several ?'s on inherited tenants. Closing Friday!

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New landlord- Several ?'s on inherited tenants. Closing Friday!

Brad E.
Investor · Athens, GA · Member since 2015 · 205 posts · 66 votes

Hi folks - I am closing on my first rental property (duplex) this Friday and have some questions about inherited tenants. 

1.  If I close on 9/1, which is also the day rent is due, how do I get the rent payment?  I assume the tenant would not be aware of the closing date and would submit payment to the seller as the normally do this time of month.

2.  Unit A's lease is up on 8/30.  How do I know for sure he intending to be out by 9/1 as the agents are telling me he is?  

3. Unit B has a lease extending through July 2018.  I want to have that inherited tenant sign a new lease with the same terms, but on my paper.  How do I go about doing this?  Can I force it?

3a. The current lease states that rent is due on the first of the month. This is in conflict with a section titled 'additional provisions' under which it states the tenant can break payments in two payments due on the 1st and 15th.  I do not want to allow this.  Can I remove this stipulation on the new lease I am wanting to have them sign?

3b.  I want to add additional fees, specifically for parking violations, so that I can use that as motivation should the need arise.  Can I add fees like this to the lease?

4.  I want to require renter's insurance.  Can I force the inherited tenants to purchase renter's insurance?

Thanks in advance for any wisdom you can share.

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Andrew B.
Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
9y
1. the months rent should be handled in closing. previous owner should credit rent to you, and he will receive rent from tenant. then you give tenants all your contact info after closing, and tell them where to send the next months rent. this should be discussed with your attorney to be sure its done right. 2. the old tenants lease transfers to you. you cannot make any changes. you cannot make him sign a new lease, or add fees, or any of that.
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  • Steven D.
    Investor · Arvada, CO · Member since 2017 · 109 posts · 112 votes
    9y

    Generally the lease that they signed will be legally binding even through the sale of the home. Your best bet is to sit down and have a chat with the tenant, if you are personal and develop a good relationship with them I would bet that you can come to agreement on some terms.  Good Luck!

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  • Stephen Nava
    Investor · Austin, TX · Member since 2017 · 54 posts · 11 votes
    9y

    1. Check your final closing disclosure to see if last month's rent will be itemized on the form. If it isn't, you need to request for the tenant's contact information and inform them where the rent needs to be submitted.

    2. You need to check the law and mail out a "notice to vacate" using certified mail. Have all your contingencies in place. 

    The other questions, you should talk to a real estate attorney.

    1Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    9y
    1. the months rent should be handled in closing. previous owner should credit rent to you, and he will receive rent from tenant. then you give tenants all your contact info after closing, and tell them where to send the next months rent. this should be discussed with your attorney to be sure its done right. 2. the old tenants lease transfers to you. you cannot make any changes. you cannot make him sign a new lease, or add fees, or any of that.
    2Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    9y
    also, if you are buying this property under the contingency that one unit is vacant, you DO NOT close if there is someone there. you tell previous owner you are not closing until unit is vacant or he can leave $10-$20k in escrow account for possible eviction purposes...not sure if thats possible this late in the game though
    1Reply
  • Brad E.
    OP
    Investor · Athens, GA · Member since 2015 · 205 posts · 66 votes
    9y

    Ok thanks guys.

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  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    You do walk thru of common areas and the apartment that's to be vacant morning before closing to verify.

    Rents for Sept should be in closing docs seller pays to you. along with security deposits and any interest.

    Moving tenant, sec deposit should come from seller. your taking possession as of 9/1 so condition of unit is as of that date for you,, and seller would do refund on deposit. Tenant has no claim on you if he is out.

    All leases, sec deposits,  and terms follow and transfer over to you.

    When lease term ends you can give proper notice of any changes you want, rent increase, parking violation fees, ect... until then it stays the same and you can't change the split month payments..until you do a renewal with your new lease terms. 

    You can not require renter's insurance until you have a lease renewal with proper notice of this requirement. 

    You can ask new lease holder to sign your lease but if terms are not equal he can stay as is and that's that.

    Post on entry, and deliver to door your name and emergency contact information , who and where to pay, as of date of ownership, Seller should also do same notice to tenants introducing you as new owner.

    2Reply
  • Brad E.
    OP
    Investor · Athens, GA · Member since 2015 · 205 posts · 66 votes
    9y
    @Deanna McCormick

    Thanks for the insight.  My agent is telling me that the rent cannot be transferred to me at closing b/c it would be a type of mortgage fraud?  She said not funds can be transferred to me from the seller. That doesn't make sense to me because they are already transferring the security deposit.  

    She says I will have to collect rent after closing.  Seems like I might not be off to the best start.

    When you say 'post on entry' what exactly does that mean?

    As I am writing this I am thinking I should maybe go ahead and get something in the mail now and then follow up on the day of.

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  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    Your agent is stupid,, call closing / title agent that handling the closing,, you should get a closing statement prior 3 days to closing,, see if rents / deposits are on that equal to Septembers rent.. if not say you'll have to delay closing until that's figured out.. OR the landlord has to notify all tenants prior to the 1st that rent is to go to you on 9/1.. but it's got to be somehow in writing and that any rents submitted to seller for 9/1 rent would be given to you withing 24 hours. 

    Post on entry should have been Post in entry to building / by mailboxes.. 

    2Reply
  • Brad E.
    OP
    Investor · Athens, GA · Member since 2015 · 205 posts · 66 votes
    9y

    @Deanna McCormick

    Great advice....thank you so much!

    0Reply
  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    @Brad E.undefined  I just closed on a multi unit deal,, and if you have an agent and your paying him big bucks for the work along with title / closing fees  you deserve proper service,, a Assignment and Assumption of leases, along with rent roll, rent amount, rent status paid, unpaid, security deposit w interest amounts for each unit should be what your required to have.. As a Seller that's what I had to supply my Buyer each time I sold,,, sold 3 properties in the last 3 years.. 

    1Reply
  • Kenneth Mooney
    Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
    9y

    (1) Rent should either be on your HUD-1 or the old owner will have to give it to you after closing. Ideally the current owner has sent out notice to these tenants letting them know that he is selling the property and that the rent is to now be made payable to "ABC 123". Assuming that this has not happened you will have to track down rent from old owner.

    (2) You could have him sign an estoppel agreement saying that the information on the lease is correct and that he and the current owner agree to it. You could add a special stipulation to it saying that he will be out on 8/30. 

    (3) Do not believe you can force this but often times if it is the exact same terms then they will have no problems signing your lease, as long as it is the exact same terms. 

    (3a) The additional provisions I believe would be what you would have to honor. I could be wrong though. Would definitely recommend having an attorney look at it. You can always remove it if you are negotiating the lease. You might want to figure out why it is in there though. It might be in your favor to do it. 

    (3b) You can always add anything if you are re-negotiating a lease. 

    Hope this helps! Is the rental in Athens?

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  • Brad E.
    OP
    Investor · Athens, GA · Member since 2015 · 205 posts · 66 votes
    9y

    @Deanna McCormick

    I have most of that thankfully.  The problem now with the security deposit.  The seller has not addressed the deposit of $500 or how it would be handled.  

    Also I also took your advice about getting it in writing that the seller would send me any funds that the tenant sends him.  I dont know why I am having to push so hard for either of these things.

    What I did today was go ahead and send both tenants letters with instructions on paying rent on the 1st via certified mail.   

    @Kenneth Mooney

    Thanks.  That is what I am trying to avoid for sure...chasing rent from the previous owner.  Who knows if I would ever see it.

    I had an estoppel over to him through my agent but it wasn't responded to.

    Yep the rental is in Athens on the west side.

    0Reply
  • Jason Fike
    Investor · Mission, KS · Member since 2016 · 42 posts · 22 votes
    9y
    My worst mistake to date...inherited tenants in a duplex I purchased. I didn't screen them. I didn't check payment history. The seller and realtor convinced me that they were "good" tenants. Had to evict both tenants and they destroyed the property! Rookie moves. Costly lesson.
    1Reply
  • Kenneth Mooney
    Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
    9y

    @Brad E. , common mistake to make to not get them signed. I have made the mistake as well. For future reference I wouldn't close unless you get them signed. Bad tenants can cause a lot of problems. 

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